AI Revolution: Transforming the US Fashion Industry with Cutting-Edge Innovation

AI in Fashion Market

As per Knowledge Sourcing Intelligence (KSI) latest report, the AI in Fashion Market is expected to grow at a CAGR of 42.72% from USD 2.5 billion in 2025 to USD 14.8 billion by 2030.

AI in Fashion Market Highlights:

  • Personalized Shopping: AI enhances customer experiences with tailored recommendations and virtual try-ons.
  • Supply Chain Optimization: AI streamlines operations, reducing costs and improving efficiency.
  • Trend Forecasting: AI analyzes data to predict fashion trends and innovate designs.
  • North American Leadership: Strong AI investments and tech giants drive market growth.

The effective use of Artificial Intelligence (AI) is revolutionizing fashion brands, which is being driven by the consumer demand for personalization, sustainability, and efficiency. With the US fashion market at the forefront, the adoption of AI technologies is accelerating, which is further being fueled by a tech-savvy consumer base, a robust technological infrastructure, followed by significant investments from both public and private sectors.

The incorporation of AI is one of the significant factors influencing the growth of several segments of the fashion business. AI technology boosts client satisfaction and loyalty via personalized shopping experiences using data analysis. AR & AI Virtual Try-On and Fitting Room solutions enhance the customer shopping experience, reducing return times and ensuring a high level of certainty. The industry will continue to benefit from supply chain optimization, dynamic pricing, fraud detection, trend research, and new product innovation, focusing on sustainability. These initiatives will help address rapidly changing customer expectations by improving secure transactions and operational efficiency. The fashion market is a fluid environment that also improves standards, although the introduction of AI has a broader impact on driving this industry.

The Booming US AI in Fashion Market: A Snapshot of Growth

According to the USCC data of April 2023, it is anticipated that more people will be shopping online and being influenced in their buying decisions by social media. By 2022, the fast fashion business was expected to account for $106.4 billion in revenue.

Using a centralized and fast-moving supply chain and leveraging the search histories of consumers on its app, Shein is taking major market share in the United States, competing with rivals such as Zara and H&M, according to the same source. Other fashion-related Chinese businesses are taking an interest in this AI business model.

Governmental investments in the AI-based technology sector witnessed major growth within the past few years, especially in countries like the USA, UK, India, Canada, and Japan. The UK Government introduced AI Tech Missions Funds, under which the government allotted about GBP 110 million, whereas about GBP 900 million was allotted for AI Research Resources.

Some of the major market players operating are Microsoft Corporation, Amazon Web Services Inc., IBM Corporation, Intelistyle, Stylumia Intelligence Technology Pvt. Ltd., LALALAND, True Fit Corporation, Stitch Fix, Inc., ZMO.AI, Zalando SE, Neural Fashion AI, and Resleeve, among others.

The Increasing Popularity of AI in the Fashion Industry

The adoption of AI is expected in fashion, with more picky customers seeking unique style preferences and experiences. AI-led recommendations, influencer inspiration, and customizable products are driving a growing proportion of this shift. Rather than thinking about a one-size-fits-all, current times focus more on the individual. As such, consumer demands lean towards personalization, and brands respond by adopting innovative technologies. It demonstrates a significant shift in how people connect with the industry they engage with, and also deeply offers their input for advancements through data insights.

In addition, Mango, one of Europe’s top fashion companies, is pushing the boundaries for its digital transformation with the introduction of Lisa. Lisa is an in-house conversational generative AI platform that was introduced in October 2023. In under nine months, the fashion company developed its conversational generative AI platform that uses a spectrum of models Lisa works with, some proprietary and others open-source. This new platform is built on the backbone of Mango’s tailored interface, similar to ChatGPT, and is intended for use by its partners and workforce.

Increasing Global Ownership of Smartphones

 The major factor propelling artificial intelligence (AI) in the fashion market’s growth is the increasing ownership of smartphones worldwide. With the increasing ownership of smartphones, consumer accessibility to the fashion sector is increasing rapidly. The global smartphone ownership witnessed a major growth, with about 4.3 billion individuals, or about 54% of the total global population owning smartphones, as stated by the GSMA.

In the fashion sector, various global retailers introduced AI-based try-on features that enable the consumer to try clothes and accessories virtually, increasing the demand for AI in the fashion industry. Smartphones also enhance the customer experience and feature data-driven insight into the latest trends.

Virtual Try-Ons and Immersive Experiences: Redefining Retail

The combination of AI with virtual reality (VR) and augmented reality (AR) is revolutionizing the retailing experience in the US AI in Fashion market. Computer vision and machine learning-based virtual try-on solutions enable customers to see how clothing or makeup would appear prior to actual purchase.

In June 2023, Google launched an AI-driven virtual try-on for women’s tops, allowing customers to view how clothing falls and fits on various models.

The US AI in the Fashion industry is also witnessing an increase in AI-based photorealistic visuals for marketing and design. These technologies allow US companies to develop immersive, interactive experiences that endear them to consumers, further affirming the United States’ position at the forefront of embracing innovative retail technologies.

Trend Forecasting and Design Innovation: Staying Ahead of the Curve

Integrating AI technologies within fashion design, where deep design plays a major role, is changing how fashion is conceived, produced, and marketed. Some of the changes are taking their cue from technological developments, others from changing consumer preferences, and others from investments that stakeholders are making into the business.

Moreover, as AI was introduced in the industry, governments worldwide established regulations and policies for its ethical usage, protection of data, and consumer protection.

  • The General Data Protection Regulation by the European Union holds any processing of data very seriously, defining clear protocols for them on how exactly they collect and use consumer information through AI.
  • The United States Federal Trade Commission issued guidelines on the use of AI in business operations, urging transparency and fairness. Although government statistics on AI adoption in fashion are sparse, the augmented regulatory focus denotes its increasing importance in the industry.

Fashion brands and tech companies with their AI Drive Technologies

 Shein uses artificial intelligence to dynamically make changes to its supply chain and consumer demand. Up to 600,000 listings for a global market are sold. Using this AI reduced unnecessary inventory and costs associated with predictions of style and preferences.

  • In March 2024, Oracle introduced new artificial intelligence (AI) capabilities within Oracle Fusion Cloud Customer Experience (CX) to help marketers, sellers, and service agents accelerate deal cycles.
  • In September 2023, with the growing interest in AI-powered consumer technologies, Humane Inc. unveiled the complete form factor of its first product, the Humane AI Pin. Before its official release on November 9, the Ai Pin was showcased at Paris Design Week in 2024 as part of a partnership with the design label Coperni. It is a screenless, stand-alone device and software platform made just for AI called the Humane AI Pin. Incorporating a considerable range of sensors, the wearable, made up of intelligent clothing, is designed to integrate with users’ daily routines, thereby allowing for more natural and intuitive computer interactions
  • In April 2023, the first beta of a fashion assistant powered by ChatGPT, made available on the app and website of Europe’s leading online clothing and leisure goods retailer, Zalando.
  • In June 2022, Pinterest announced that it had finalized the acquisition of THE YES, an AI-powered fashion purchasing platform that lets users browse a customized feed based on their active input regarding brand, style, and size.

Future Outlook: A Dynamic and Transformative Landscape

Artificial Intelligence (AI) in the fashion industry has played a very significant role in the ongoing trends, along with the increasing transformative era, which is redefining the operations of the fashion brands. From optimizing the supply chains to personalizing the shopping experiences for customers, AI’s role in the sector has set up unprecedented precision and efficiency.  As the US remains a global leader in fashion innovation, AI’s role in this sector is expanding rapidly, driven by technological advancements and evolving consumer expectations.

Moreover, with the ongoing increase in online shopping and the collaboration of fashion brands with AI chatbots, users are experiencing efficiency in their shopping experience. In this regard, as per the US Census Bureau, e-commerce now accounts for a considerable percentage of the US apparel sales, which is further expected to increase and grow with the growth of retailers who are ready to invest in AI.  One common example is Amazon Fashion’s AI-powered visual search tool, launched in 2024, which allows customers to upload images to find similar products, contributing to its dominance in online fashion retail.